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Post-PPI USD Strength Reverses Into Close With Eyes On Upcoming Event Risk

FOREX
  • US PPI data surprised to the upside on Friday, prompting a quick spike in the greenback amid pressure on equity indices. The move was most notable in USDJPY which rallied over 100 pips to fresh intra-day highs of 1.3690.
  • Despite the initial USD surge, momentum faded thereafter, and the greenback slowly reversed lower throughout the course of the afternoon, aided by a softer inflation component within the UMich survey and as markets turn their focus to next week’s CPI and major central bank decisions.
  • With equities trading back into positive territory, the likes of GBP, AUD and NZD erased the entirety of the post-data weakness and all look set to post gains of above 0.5% on Friday.
  • GBPUSD’s trend condition remains bullish. Price has traded through the 200-dma and maintains a bullish sequence of higher highs and higher lows. Note that moving averages studies remain in a bull-mode position. A resumption of gains places the focus on 1.2406, the Jun 16 high.
  • EURGBP edged toward the bottom-end of the week's range into the Friday close - with support layered between 0.8556-62 but seen stronger into the 200-dma/Dec 1 low, both of which cross at 0.8547. Weakness through here would be the cross at the lowest levels since late August.
  • Attention turns to Tuesday’s US CPI report followed by a host of major central bank decisions next week including the Fed and the ECB.
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